Virgin Atlantic said today that a surge in business travellers helped to boost annual profits in 2007/08. Premium passenger numbers rose by 22% during the year, as Virgin Atlantic took market share from BA and other carriers.

Pretax profits before exceptional items rose 38%, from £44million to £60.9million. Group sales, including tour operator Virgin Holidays, rose 9.1% to £2.336billion.

Pretax profits increased from £6.0million to £34.8million and retained profits for the year were £47.7million, up from £6.6million. Virgin Atlantic’s cash position remained strong, with nearly £600m in the bank at the end of the financial year. Cash reserves have continued to build and were £838m at the end of June 2008.

The total number of passengers carried during the year increased by 7.6%, to 5.7 million, as Virgin Atlantic expanded the number of destinations it serves around the world to 30. New routes launched during the last year included London Heathrow to Chicago, Nairobi and Mauritius, as well as Gatwick to Kingston.

The annual profits trigger a bonus payout to staff, who each receive the equivalent of one and a half week’s extra pay. 10% of the Group’s profits is shared among staff.

Following on from the good results for 2007/08, Virgin Atlantic has had a strong start to its current financial year, with pretax profits in the first quarter of 2008/09 up to £23.5 million. Sales were up 16% to £645.3million, from £558million in the same period the year before. The results were partly strengthened by a “T5 Effect”, as Virgin Atlantic gained passengers from BA because of the ongoing problems at their new Heathrow terminal. Load factors in the first quarter were 77%, up from 74.8%.

With recent proposals by BA to effectively merge with American Airlines, Sir Richard Branson, President of Virgin Atlantic commented:

“It’s ironic that just as regulators are breaking up one monopoly - BAA - British Airways and American Airlines are trying to create another. Our results prove that consumers want choice on transatlantic routes. Unless the regulators block the proposed BA/AA monopoly, consumers will lose out - and they’ll pay higher ticket prices for the privilege.”

The results were enhanced as investment in premium facilities began to bear fruit, with passengers switching from other carriers to take advantage of faster and more efficient services on the ground. The new Upper Class Wing at Heathrow’s Terminal 3 has transformed the check-in experience, with passengers arriving in the Heathrow Clubhouse minutes after being dropped off by limo at the airport. Substantial investment around the world, including a new Clubhouse at Boston, and an upgrade of the Virgin Atlantic Clubhouse in Tokyo, has also attracted more passengers.

Steve Ridgway, Chief Executive of Virgin Atlantic, added: “While the outlook remains pretty overcast for the aviation industry, the winners will be those airlines that focus on offering the best customer service and which are nimble enough to take advantage of the opportunities that lie ahead. Our strategy of slowing our growth has paid off in time for the slowdown in the industry. Against the backdrop of high oil prices and weakening consumer demand, we are well-placed to succeed over the coming months. We have diversified our route network, focused on providing the best product in Upper Class, Premium Economy and Economy, hedged our fuel purchasing and built up a strong cash position.”